New York
Times Owner Slim’s Historic Tobacco Industry/Philip Morris
International/Altria Connection
A 2010
research paper by Tiffany Burch, Nathaniel Wander and Jeff Collin, titled
“Uneasy money: the Instituto Carlos Slim de la Salud, tobacco philanthropy and
conflict of interest in global health”, described some conflicts-of-interest
and ethical issues related to New York Times Owner
Slim’s foundations that raised some questions about whether or not the New
York Times owner is actually a “new breed” of billionaire who has
aided health historically:
“In May
2007, the Instituto Carso de la Salud—now Instituto Carlos Slim de la Salud
(ICSS)—was endowed with US$500 million to focus on priority health issues in
Latin America… ICSS was soon criticized, however, on the grounds that its
funding was derived from tobacco industry profits and that its founder Carlos
Slim Hélu remained an active industry principal…This research…demonstrates a
prima facie conflict of interest between ICSS's health mission and its
founder's involvement in cigarette manufacturing and marketing, reflected on
ICSS's website as a resounding silence on issues of tobacco and health….”
According
to the “Uneasy Money” research paper:
"The
Instituto Carlos Slim de la Salud (ICSS) or Carlos Slim Health Institute
(originally Instituto Carso de la Salud), was founded as a health charity by
Mexican businessman Carlos Slim Helú and inaugurated on 18 September 2007 by
Mexican President Felipe Calderón and Sra. Vivian Fernández, wife of the
president of Panama. Backed by health and political elites, ICSS…is
partnering with the Clinton Global Initiative…Slim, one of the world's richest
men whose holdings include telecommunications, finance and
retailing, also owns a 20% stake in the Mexican cigarette manufacturer
Cigarrera La Tabacalera Mexicana (Cigatam), with the majority interest
currently held by Philip Morris International (PMI). Having previously
served on the board of Philip Morris Companies, Inc. (renamed Altria in 2003),
Slim joined the board of PMI when it was spun off from the Altria parent in
April 2008. His annual compensation from PMI includes a retainer of at
least US$100 000,
reimbursement of travel and business expenses and shares worth US$140 000….
“…The
then editor of Tobacco Control Simon Chapman described
Slim as ‘a direct beneficiary of massive sales of tobacco’…This paper documents
Slim's…involvement in tobacco corporations, detailing tobacco's significance in
the development of his Grupo Carso (GC) and his historic and ongoing strategic
value to the global tobacco industry…The documents presented here substantiate
a longstanding pattern of financial and political relations between Carlos
Slim/GC and Philip Morris/Altria/PMI…..
“The
relationships between ICSS, Carlos Slim and the tobacco industry remain rooted
in the finances of the Slim/GC commercial enterprise and in the services to the
tobacco industry that Slim continues to provide. They have been and remain
arguably antithetical to national, regional and global interests in public
health…
“…GC
(originally Grupo Galas) was incorporated in 1980 ‘to obtain the majority stake
in Cigatam, in which Philip Morris was a 29% partner’….By 1995 Cigatam was
Mexico's most profitable domestic cigarette company, generating 24% of GC's
revenue and 32% of its net income. In 1997, immediately before Slim was
elected to its board of directors, the Philip Morris parent company
increased its stake in Cigatam to 50%, paying GC US$400 million. Shortly
after the inauguration of ICSS in 2007, Slim/GC further profited by selling an
additional 30% of Cigatam to PM/Altria at a price of US$1.1
billion. By 2008, Cigatam commanded 55% of the Mexican cigarette market
and continued to increase its profits. The Slim/GC enterprise continues to
benefit from its remaining 20% share of Cigatam, as well as from holdings
in PMI.
“During
the early 1980s, Slim/GC also became the largest shareholder in Cigatam's main
competitor, Cigarerra La Moderna (CLM), which was partnered with British
American Tobacco (BAT), though seemingly less openly than was Cigatam with
PM…In 1985, ostensibly ‘to avoid antitrust problems’, Slim sold his 40%
stake in CLM (which then held a 75% share of the Mexican market) to
competitor/colleague Alfonso Romo Garza for US$32.4 million…Though formally
competitors, Cigatam and CLM were described as functionally cooperative, being
said to constitute an effective merchandising duopoly that controlled 98%
of Mexico's cigarette market in 1997….
“Slim's
direct involvement in PM/Altria intensified during his service on the company's
board of directors from 1997 to 2006, and he benefited additionally from annual
retainers and share accumulations. Altria's 2005 Annual Report, the last
full year in which Slim served, showed him owning over 4 million company
shares, almost 1.5 times that of then-Chairman Louis Camilleri. In 2000,
Slim purchased 3.9 million shares at greatly depressed prices, selling
them for a profit of US$63 million 1 year later. Slim retained 1.5 million Altria shares when he retired from its
board in the spring of 2006.
“…Tobacco
money enabled GC to purchase a share of the privatized Telefonos de Mexico
(Telmex) from the Mexican government in 1990, which became the basis of GC
telecommunications holdings…ICSS's funds originated in the tobacco industry…
“Even
before his elevation to its board…Slim had been serving as a Philip Morris
conduit to the Mexican government….Slim's value to Philip Morris was further
demonstrated when the company made a substantial donation to a Slim family
charity consistent with its wider ‘influence’ strategies….In March 2008, less
than a year after the launch of the ICSS, Slim became a director for the newly
independent Philip Morris International, when it was spun off from the
PM/Altria parent company…Specifically, he serves on PMI's Regulatory Affairs
and Product Innovations Committee…
“If Slim
had no further role than the financing of a health charity, it would still
present a problematic case of ‘white coating’—the tobacco industry clothing
itself in the respectability and goodwill of medical research and healthcare
provision. While Slim appears to have no official role in ICSS per se, he
remains the Chairman Emeritus of GC, within which ICSS and its parent the
Carlos Slim Foundation, are described as ‘a fundamental part of Carlos Slim
Helú's business strategy and culture’…Although Slim does not sit on the ICSS
board of nine directors,…three are family members (son Marco Antonio, also CEO
of Inbursa and a GC director; son-in-law Arturo Elias, a GC director and a
key Telmex executive, described as Slim's spokesman; and daughter
Vanessa), a fourth is a GC executive (Raul Zepeda, a Telmex attorney and
Inbursa director), two are directors of GC and/or its subsidiaries (Jose Kuri
and Roberto Kriete)…
“Finally,
it cannot be overemphasized that Slim, who is said to remain in close
communication with his three sons and two sons-in-law, the active managers
of his business interests, is not simply any wealthy patron. His family
holdings were reported to comprise more than 5% of Mexico's 2006 gross domestic
product and to account for one-third the value on Mexico's US$422 billion stock
exchange. Consistently ranked alongside Bill Gates and Warren Buffett as one of
the three richest men in the world, Slim's significance within a national
economy 1/14th the size of the US substantially exceeds that of Buffett
and Gates…
“ICSS's
funding from telecommunication and infrastructure shares ultimately derives
from the tobacco industry. By Slim's account, it was the large cash flows
generated by cigarette manufacturing, and by our analysis, additional profits
from shares in domestic and transnational tobacco companies that financed GC's
expansion into these other sectors…The tobacco links at play here are not
matters of ancient history: GC, which parents the Carlos Slim Foundation of
which ICSS is a subsidiary, retains a 20% share in the pre-eminent tobacco
company in the largest market in Spanish-speaking America, and Slim and
his family have benefited from owning large volumes of shares in Altria and
PMI….By serving PMI, the founder of what would be Latin America's most
influential health charity has agreed to promote the long-term interests of the
world's leading tobacco transnational....
“The
profits, power and prestige of Slim, his family and GC are substantially
derived from selling cigarettes; their ongoing engagement in this business
suggests their continued acceptance of this activity as unproblematic…ICSS can
reasonably be viewed as essentially the tobacco-funded gift of one of the
world's richest men….”
(end of part 3)
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